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October 29, 2026

Rates Are Rising Again: What the Bank of Canada Hike and Fed Hold Mean for Job Seekers

The Bank of Canada raised its key rate for the first time in more than three years, and the Fed held steady with two officials pushing for a hike. Layoffs stay low, but hiring is slow. Here is what that low-hire market means for your search, plus an interview tip.

A strong economy that isn't hiring much

On Wednesday, two central banks sent the same signal from different starting points. The Bank of Canada raised its policy rate by a quarter point to 2.5%, its first increase in more than three years, the Canadian Press reported. A few hours later, the US Federal Reserve held its target range at 3.75% to 4%, but two voting members, Lisa Cook and Beth Hammack, dissented in favour of another increase.

Then on Thursday morning, US data showed the economy growing at a 3.4% annualized pace in the third quarter, above the 3.2% economists expected, according to Reuters.

For job seekers, the puzzle is obvious: if the economy is this strong, why does finding work feel so hard? The short answer is that both countries are in what economists often call a low-hire, low-fire market. This article unpacks that, explains what higher rates could mean for hiring over the next few months, and closes with an interview tip suited to these conditions.

In Monday's job market outlook, we previewed these decisions. Here is what actually happened and why it matters.

Canada: a rate hike with unemployment at 6.5%

Central banks usually raise rates when the job market is tight. Canada's isn't. The Bank of Canada itself said the unemployment rate has hovered around 6.5% for several months and that a broad set of indicators still point to "some excess supply in the economy." In plain terms: there are more people available to work than the economy is currently using.

The reason for the hike is inflation. The Bank said inflation is running higher and more persistently than it projected in July, and it wants to stop high energy prices from spreading into other prices. It expects consumer price inflation to reach about 3.5% by year-end and not return to its 2% target until mid-2028. It forecasts GDP growth of just 1% for 2026, with a slowdown expected in the fourth quarter because of new US tariffs.

Governor Tiff Macklem argued the new rate is still low enough that it is not restraining growth. The Bank also left the door open to more increases while saying it will "proceed carefully." CIBC's Andrew Grantham expects a pause at the next decision on December 9 and another hike in January, the Canadian Press reported.

The jobs backdrop is mixed. Statistics Canada's fall review of the economy, released October 28, found that the share of unemployed people finding work rose from May to July compared with a year earlier, while layoff rates stayed similar. Then employment contracted in August and September, with losses concentrated among public sector workers and young people. Vacancies have barely moved: employers reported about 501,000 open positions in July, roughly 2.9 unemployed people per vacancy, Staffing Journal reported from StatCan payroll data.

What it means for Canadian applicants: The hike won't erase jobs overnight. Rate changes typically take months to work through the economy, and the Bank argues policy remains supportive. But higher borrowing costs plus tariff uncertainty give employers another reason to delay new headcount, especially in interest-sensitive areas like real estate, construction financing and consumer retail. Our interpretation, not a Bank of Canada forecast: expect hiring managers to stay cautious into the new year.

United States: growth without much hiring

The US picture is even more striking. The Fed's statement described economic activity as expanding at a strong pace, with strong productivity growth and robust capital investment. Reuters credited third-quarter growth to resilient consumer spending, which rose at a 3.8% pace, and AI-driven business investment.

Yet job creation is thin. Payrolls grew by just 29,000 in September, as we reported on Monday. The Fed's own wording is telling: job gains "have kept pace with the workforce," and unemployment has changed little. That is a description of a labour market treading water, not one expanding.

Layoffs remain low. Initial unemployment claims, a weekly measure of new layoffs, were 194,000 for the week ending October 24, low by historical standards and below the roughly 231,000 recorded a year earlier. But continuing claims, which track people still receiving benefits, stood at about 1.73 million in mid-October, according to the Labor Department. That combination suggests the problem is not mass firing but slow rehiring: once someone is out of work, it takes longer to get back in.

On rates, the Fed raised in September for the first time in three years, and traders were pricing a 73% chance of another hike in December ahead of this week's meeting, Kiplinger reported. September consumer prices were up 3.7% from a year earlier. The two dissents suggest that a December increase is a live possibility, though nothing is decided.

Why "low-hire, low-fire" matters for you

This kind of market splits people into two groups.

If you have a job, your position is relatively secure. Layoffs are low, and many employers are holding on to the staff they have.

If you are looking, the math is harder. When few people quit and companies add headcount slowly, fewer seats open up. The August US job openings report showed a quits rate of just 1.9%, and Indeed estimates about one opening per unemployed person. In Canada, there are close to three unemployed people per vacancy.

Three practical implications:

  1. Searches are taking longer. Budget for it financially and emotionally, and keep several applications moving at once rather than waiting on one process.
  2. Strong-growth sectors still matter more than the headline. AI infrastructure, data centres, engineering, health care and skilled trades continue to show demand, as we covered in Wednesday's look at in-demand jobs.
  3. Interviews are more competitive. With more qualified candidates per opening and employers watching costs, hiring managers want evidence you will contribute quickly and understand their pressures. That is today's tip.

What to watch next

  • Friday, October 30: The US Employment Cost Index for the third quarter, a broad measure of wage and benefit growth.
  • Tuesday, November 3: The next US job openings (JOLTS) report.
  • Friday, November 6: October jobs reports from both Statistics Canada and the US Bureau of Labor Statistics. These will be the first labour data since this week's rate moves.
  • December 8–9: The Fed's next meeting, followed by the Bank of Canada's decision on December 9.

Tip #4: Prepare one question that shows you understand the employer's pressures

The problem: At the end of most interviews, candidates ask generic questions such as "What does a typical day look like?" They are fine, but forgettable, and they miss a chance to show business judgement.

What to do instead: Before the interview, spend 15 minutes on the company's recent news, earnings or press releases. Identify one pressure it faces, such as rising costs, tariffs, a new product launch or a hiring freeze in other teams. Prepare a question that connects that pressure to the role.

Example: You're interviewing for a procurement analyst role at a Canadian manufacturer.

  • Before: "What are the biggest challenges of this role?"
  • After: "With tariffs and higher borrowing costs this year, has the team's focus shifted toward supplier diversification or cost control? Which would matter most in my first six months?"

New graduates can do the same with an industry article or the company's annual report.

Today's action: For your next interview, read the employer's latest press release or news story and write one question linking it to the job.

The takeaway

Rates are moving up in Canada and may rise again in the US, even as growth holds up and layoffs stay low. The result is a job market that protects people already employed and makes life harder for those looking. You can't change the cycle, but you can aim at sectors still adding demand, plan for a longer search, and show interviewers you understand the pressures their business is under.

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